Home ListingAugust 8, 2014

Norway Steps Up Investor Pressure

<p>The world’s largest owner of listed stocks appears to mean business on corporate governance.</p>

Reported by Featured Author

The Norway Pension Fund Global is to publicly declare how it will vote at corporate annual meetings a day before the event to increase transparency and pressure on directors—and other investors—to act.

The $825 billion fund—which owns the equivalent of 1.3% of every listed company in the world—told the Financial Times that it would start with a select group of companies next year, but would eventually reveal its voting intentions for all the companies in its portfolio.

The fund, which is noted for its transparent approach to investment, had previously only revealed how it had voted at company meetings after the event. A tool on its website allows interested parties to view how it voted on any proposal at any company meeting since it held the security.

“We think this will contribute to the transparency of how we manage the fund and assess questions for voting,” a spokesperson for the fund, which is managed by Norges Bank Investment Management, told the newspaper.

Several large investors already disclose how they will vote at company meetings to try and encourage other company investors to do the same, although the practice is more prevalent in the US than Europe.

Data from Hermes Equity Ownership Services in May showed companies that actively improved their governance, either through investor pressure or their own free will, made better returns for their investors.

The UK’s Investment Management Association has launched an investor forum, which will attempt to bring together international, institutional investors who can cooperate on voting at company meetings. Using a system that collates governance reports on all companies listed on the FTSE All Share index, fund managers and other large investors may have better access to information from which to make informed decisions on voting.